11th Dec 2008 07:00
11 December 2008
MirLand Development Corporation plc
("MirLand" / the "Company")
MIRLAND ENTERS INTO NEW LOAN AGREEMENT
MirLand Development Corporation plc, one of the leading residential and commercial property developers in Russia, announces that it has entered into a loan agreement (the "Loan") with Jerusalem Economy Ltd ("JEC"), Industrial Buildings Corporation Ltd ("IBC") and Darban Investments Ltd ("Darban"). JEC, IBC and Darban hold an effective interest in approximately 75% of the Company.
The terms of the Loan allow for the Company to draw down $10 million during December 2008 and $21 million during January 2009. The Loan, which is unsecured, will principally be used by the Company to fund ongoing initial working capital requirements in respect of its Triumph Park residential project in St. Petersburg, where construction of part of Phase 1 has now commenced as well as other projects, and to continue to progress the securing of necessary building and other permits for its projects, in particular the Moscow Skyscraper project. The Board of MirLand believes that both the Triumph Park and Moscow Skyscraper projects will offer considerable attractions to potential investors and owner-occupiers when market conditions improve and wishes to ensure both projects continue to progress to take advantage of that recovery.
The Loan is repayable at the latest by 31 March 2010 and carries an interest rate of 12% per annum, payable when the Loan itself is repaid.
Mr Eliezer Fishman, a non-executive director of the Company, and his wife Tova Fishman together hold approximately 53% in two companies which, through various intermediate companies hold an effective interest of approximately 73% of JEC which in turn holds an interest in approximately 28.3% of the Company. JEC also holds an interest of approximately 65% in IBC which in turn holds an interest of approximately 33.4% in the Company. Mr Fishman holds an interest in approximately 54.3% of Darban.
The Loan constitutes a related party transaction for the purposes of the AIM Rules for Companies by virtues of the holdings described above. The Directors, other than Eliezer Fishman - who has abstained from voting in relation to this transaction, consider, having consulted with the Company's nominated adviser, Credit Suisse Securities (Europe) Limited, that the terms of the Loan are fair and reasonable insofar as its shareholders are concerned.
Commenting, MirLand's Chairman, Nigel Wright, said:
"As we made clear at the time we announced our interim results for the three months ended 30 September 2008, in common with most real estate business around the world we have reviewed our strategic business plan in light of continuing challenging conditions in financial markets. Our completed investment properties continue to provide solid cashflow to underpin current operations. We have, however, carefully reviewed all planned portfolio and pipeline projects and prudently adjusted the timing of some to prioritize those where the prospect of real gain remains strong despite current financial market illiquidity and which will bring the most immediate benefit to shareholders as markets recover. For the smaller regional projects, we may defer construction start and use the current period of uncertainty to progress requisite permits and consents so that we are positioned to activate these projects as conditions improve.
"By contrast, with respect to our Triumph Park and Moscow Skyscraper projects, we are conscious both of the strong socio-economic drivers underpinning demand and of the support we have received from local government and other key stakeholders in helping us bring forward our development programme. We therefore feel strongly that the current financial market illiquidity should not deflect us from our declared objectives. We are delighted that our key shareholders share this view and, despite the current adverse market conditions, have committed substantial additional financial resources to support this positive approach.
"MirLand remains strongly committed to its key markets in Russia and its long term goals. We do not underestimate the challenges we face in our business and our chosen market but intend to continue to progress our ongoing business plan prudently and in a manner which is sensitive to prevailing market conditions."
For further information, please visit www.mirland-development.com, or contact:
|
MirLand Development Corporation plc Roman Rozental |
+7 499 130 31 09 |
|
Financial Dynamics Dido Laurimore / Rachel Drysdale |
+44 20 7831 3113 |
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